We all have heard that people are making millions with cryptocurrencies. With the price of coins such as Bitcoin rising over the long term, more millionaires are being made because these are people who have invested in cryptocurrency assets.
So in this post, we shall learn how to make money with cryptocurrency bearing in mind that this is an asset class that has made a lot of difference in the lives of so many investors. What are the opportunities and how can you take advantage of them?
What Skills Do You Have?
One of the quickest ways of earning cryptocurrencies is by using the skills that you already have and asking your clients to pay you with cryptocurrencies. Some of the popular cryptocurrencies that you can receive payment with are Bitcoin, Ethereum, Litecoin and Tether and others.
How This Works
Assuming you’re a freelancer, you could find out from your clients if they can pay you in one of the assets mentioned above, then start receiving payments. Over time, you will have a substantial volume of assets in your portfolio.
Bear in mind that you should own a wallet that supports multiple assets so that you can receive the coins that are convenient for your clients.
Invest in Cryptocurrencies
There are many ways that people make profit with cryptocurrencies. One of them is through investing. There are several opportunities available. These include:
There are platforms where users can lend their crypto at profit. The owners of the digital currency lend them to borrowers at a fee. When the contract expires , the owner is paid a commission from the gains that the platform has made from the lending service.
Some platforms where you can lend crypto are Compound, BlockFi and Binance.
Staking of digital assets involves locking them up in a wallet for a specific period of time. Such locked up assets contribute to the security of the blockchain network in proof-of-stake coins.
When you stake your coins, the funds contribute in securing the blockchain and confirming transactions made on it. Validators of such networks earn income as they help in confirming transactions made on the network. They are rewarded as a result of this.
Bear in mind that not all coins are stakable. You can only stake coins that use the proof-of-stake method to validate transactions. So you can check the earning section here for coins that you can stake.
Also, when staking coins, the cryptocurrency that you’re staking can remain in your wallet throughout the duration of the staking period. You can stake your coins and earn on this platform.
Trading is one of the most popular ways of earning cryptocurrencies. In fact, it is one of the most important strategies that you should employ since crypto assets are generally volatile.
There are many investors who prefer to leave their assets in cryptocurrencies such as Bitcoin or Ethereum. The downside of this strategy is that the value of their holdings would change drastically over time. For example, Bitcoin reached a high of $20,000 in December 2017, but later dropped to around $3000 before rallying again.
Leaving your coins in crypto means that you would lose a lot of money if the price of the asset drops. But if you know how to trade, you would use the strategy to exit positions and keep the gains that you made when the price of the asset appreciates.
To be a good trader, you need the knowledge of technical and fundamental analysis. You also need to have a strategy or a number of strategies that you employ while trading.
Diversify Your Investment
In investing in cryptocurrencies, it is important that you diversify your investments the way you would if you’re investing in stocks. There are different types of cryptocurrencies such as:
- Payment tokens such as Bitcoin
- Utility tokens such as ripple and Dash
- Smart Contract tokens such as Ethereum, Polkadot and Solana
- Fiat such as USD
Having your holdings spread across all these categories of coins ensures that your risks are hedged.
Spread Your Risks
Since cryptocurrencies are volatile, it is a good idea to spread your investment over time. Assuming you’re buying $10,000 worth of crypto, it is a good idea to spread it over a period of say 6 months. This would ensure that your risks are spread over time as you buy at different prices.
Here is one of the recommended traders that you can follow in learning how to trade digital currencies.
It is possible to get cryptocurrencies freely from airdrops. Airdrops are test coins that are given to the community or public by the project owners with the objective of creating awareness for the cryptocurrency.
These have been in the news and are going strong. There are indications that non-fungible tokens will be a big driver in the arts and creative space over time. What we are seeing is that some of these artworks have been highly priced. So how do you make money from non-fungible tokens?
NFTs or non-fungible tokens are collectibles that could be work of arts/music or the like that are uniquely owned because they have been signed into a blockchain. Their value is based on this uniqueness. Most NFT creators produce limited number of the tokens so they can be quite valuable.
There are NFT marketplaces where NFTs can be bought and sold. A creator or work of arts can sell their NFTs after minting them on NFT minting platforms such as Mintable and SuperRare. Popular marketplaces for NFT include OpenSea and even Binance. You can profit from NFTs by buying their tokens or buying an NFT and selling at a higher price.
These are some reliable ways to start earning cryptocurrencies. There are others such as mining and cloud mining, but these are capital intensive or mostly fraudulent. Also, the use of faucets as a means of making profit with crypto is an absolute waste of time.
Since there are many fraudulent schemes out there trying to deceive investors, we recommend that you trade, stake or lend cryptocurrencies using a reliable platform.